Hong Kong is considered to be one of the leading cities for business in the word–if not, then the best. Its strategic location between China and the rest of the world along with its famously low tax environment have allowed its economy to thrive and adapt. The region also houses one of the most advanced finance and banking systems, contributing to the efficient and effective operations of small and large businesses alike.
The diverse geography and specializations of districts within Hong Kong Island, Kowloon Peninsula, New Territories, and numerous outlying islands have allowed a diverse and wide-range of businesses to flourish in Hong Kong.
These aspects make it an ideal place to start businesses, attracting many entrepreneurs and investors across the local and international scene.
Now, it might be intimidating to think of starting a business in Hong Kong considering its highly advanced systems and market. But business opportunities in this region are never scarce. So if you are interested in doing so, here’s how you can start a business in Hong Kong in 2022.
How to form a company in HK
While Hong Kong’s business registration procedures might be straightforward, processing the requirements might actually be time-consuming so it is important to be familiar with this in order to assure smooth progress as much as possible—although of course, you can always opt to do some consultations with experts to guide you through the whole process.
The steps involved in registering a business are as follows:
1 – Choose the type of company
When incorporating a company in Hong Kong, you will need to choose between a company limited by shares and a company limited by guarantee. You will have to choose the type of company that best suits your company’s purposes.
Company by limited shares
A company limited by shares is the more common type of business entity, and it is best suited for companies that are looking to raise capital through the sale of shares. The liability of shareholders is limited to the amount unpaid on their shares, and the company’s articles of association will outline the rights and duties of shareholders.
Company limited
On the other hand, a company limited by guarantee does not have share capital, and its members are only liable for the amount that they have agreed to contribute to the company’s assets in the event of its dissolution.
Ultimately, the best type of company for your Hong Kong business will depend on your specific purposes and goals.
2 – Choose a name
Choosing the right name for your company is important for a variety of reasons. This will serve as your first step to building your company’s identity so you’ll want to make sure that the name isn’t already in use by another business. The Registrar of Companies keeps an index of all registered company names in Hong Kong, so you can do a free search to see if your chosen name is already taken.
Of course, you’ll have to avoid any names that could infringe on someone else’s intellectual property rights. If you’re not sure whether a proposed name could violate someone’s IPR, you can search the Trademark Register to check. Remember, choosing a name that violates someone’s IPR can lead to civil or criminal penalties, so it’s best to avoid any potential problems from the start. By taking these simple steps, you can ensure that your company gets off on the right foot.
3 – Register a company in Hong Kong
Securing a business registration certificate is one of the basic steps in setting up your company in Hong Kong. This certificate is issued by the Hong Kong Business Registration Office, proving your company’s legal registration with the Hong Kong government. The application process is relatively straightforward, but it’s important to make sure that your application form is correctly filled out to avoid rejection. Once you have your business registration certificate, you’ll be able to move forward with setting up your Hong Kong company.
4 – Establish a bank account in your local area
Hong Kong has a highly competitive finance sector offering a variety of banking products and services to meet your needs. They have one of the most efficient banking systems in the world, making them a global leader in banking. The region also offers multi-currency facilities. Thus, you might have wide-range of choices and perks in opening a bank account for your business.
After your business has been registered with the Inland Revenue Department, you need to open a local bank account. When choosing a bank in Hong Kong, it is important to compare the different products and services offered by the banks. You should also consider the location of the bank, as Hong Kong is a very densely populated city and you may want to choose a bank that is close to your business premises.
5 – Get your local business address registered
Local business address is an essential part of a business in Hong Kong to assure smooth business transactions and operations.. This will ensure that you receive all mail, and it will also serve as a mailing address for your company.
Additionally, having a local business address will make it easier for customers to find you and legitimatizes your business. So if you’re looking to set up a Hong Kong-based business, be sure to get a local business address.
6 – Recruit employees
Hiring employees is a necessary step for any company looking to set up operations in Hong Kong. Depending on the business requirements, it may be necessary to hire local employees in order to have the right headcount. However, this can be a challenging task if you are not familiar with the hiring process. There are several things to keep in mind when hiring employees in Hong Kong such as finding the right people with the right skill set.
It is important to identify the specific skills and experience that your company requires. Once you have a clear idea of what you are looking for, you can start searching for potential candidates. There are various ways to find employees in Hong Kong. You may post in online job boards, through recruitment agencies or job fairs. You may also opt to hire your employees through referrals of your acquaintances.
7 – Prepare and file your taxes
After a business begins operations, it is required to pay taxes to the government and submit an annual financial report. An auditor can assist you in filing tax returns and enhancing the overall operations of your business, thereby reducing unnecessary expenses.
The auditor will ensure that the financial statements are accurate and complete, and he or she will also review the accounting records to identify any potential errors or discrepancies. In addition, the auditor can help to improve financial controls and procedures, making it easier for businesses to comply with tax laws and regulations.
Of course, it is easy to miss out on the reality of starting a business in Hong Kong. In fact, that’s a huge reason why so many fail. But if you keep your eyes and ears open, you’ll realize that there are countless resources that can help get you started. If nothing else, it will allow you to take advantage of all of the wonderful opportunities available here and start pursuing your entrepreneurial dreams in one of the most dynamic cities in Asia.
If you need to know more, you may contact me at vinod@pinetree.hk, call us on +852 3529 2328 or visit our website www.pinetree.hk to find out more about Pinetree and Sun Secretarial Services.
